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Transmar’s Cocoa Subsidiary in the U.S. Files for Chapter 11 Bankruptcy

by San Antonio Attorney

Transmar Group Ltd’s unit in the United States has filed for Chapter 11 bankruptcy following the insolvency declaration of its European parent company. The cocoa supplier attributes its filing to bad deals and British pound instability.

The company, which supplies cocoa products to big chocolate makers like Nestle and Hershey Co., filed a Chapter 11 bankruptcy petition in a New York bankruptcy court on Dec. 31.

Transmar Group is a one of the world’s leading suppliers of cocoa products with operations in the U.S., South America, Europe and West Africa.

The subsidiary intends to continue its operation throughout the bankruptcy proceedings, as stated by Transmar chief restructuring officer, Robert Frezza, in a court filing.

The move happened after the group’s European parent company Euromar Commodities GmbH, a cocoa grinder in Germany and big client to the American unit, declared insolvency in last December 2016, causing more financial stress to the business, Frezza said.

Transmar Group’s hasty expansion up until 2015, along with unstable prices of cocoa created setbacks, Frezza said, highlighting challenges consolidating their corporate and infrastructure governance.

Euromar, a unit of Transmar Group, is one of the main clients of Transmar Commodity Group, with sales growing dramatically from 2013 to 2015, the court filing said.

When Euromar was on its peak, it engaged into a variety of unbeneficial forward contracts – which is a private pact between two parties providing the purchaser a commitment to buy an asset (and the vendor a commitment to sell a certain asset). This ended up in a huge loss for Euromar when the cocoa price in the market declined unexpectedly, Frezza said.

In addition, Euromar faced more dilemma after the United Kingdom decided to leave the European Union, which resulted in fluctuations in the currency that much of the cocoa sector is traded.

Transmar’s bankruptcy stated about 200 to 999 creditors, with $100 million to $500 million in assets.